08 August, 2015

How the global financial mafia sucked Greece's blood

Greek
public debt by creditors in 2015 - Chapter 3

Key
findings from the Truth Committee on the Greek Public Debt

The loans
were portrayed as if used to assist Greece in paying wages and
pensions. Indicative of this portrayal is Eurogroup president
Juncker’s statement that disbursements are used to recapitalise
banks, pay wages, pensions and government suppliers. This is however
misleading. The bilateral loans were used primarily for debt
repayment: between May 2010 and September 2011 86% of the loans were
used solely for debt repayment. The remainder was not even used in
its entirety for budget support, but rather to pay for the setting up
of the Hellenic Financial Stability Fund.

The EFSF,
based in Luxembourg, was created in 2010 to preserve financial
stability in Europe. Nonetheless, by creating additional debts for
individual member states, the scheme deteriorated the economic
situation for Europe as a whole and especially for Greece.

Only a small
share of the loans contributed to the government’s regular
expenditure. The bailout was disbursed mainly in EFSF securities:
notes worth €34.6 billion subsidized the PSI, €11.3 billion notes
were used in the ‘Debt buy back’ and €37.3 billion has been
currently borrowed for the Greek banks.

The majority
of the EFSF bailout was disbursed ‘in kind’, not in euros.
Cashless operations constitute 65.4% of total EFSF loans. As
elaborated in Chapter 4, the EFSF facilitates an exchange of
obligations, meaning that the loans are, on the whole, not designed
to enter Greece, but rather be used directly, inter alia, for the
repayment of debts.

The European
Parliament and the IMF acknowledge that the IMF programme results
were “uneven” and contained “notable failures”. This is a
gross underestimation of the extent of the deceit towards the Greek
people.

The IMF
knew from the outset that there was no historical precedent for such
a scale of fiscal adjustment, stating in March 2010 that the
programme would result in “sharp contraction of demand, and an
attendant deep recession, severely stretching the social fabric”.
As such, several members of the Board pointed to the programme’s
“immense” risks.

The
systematic bias and lack of transparency in the IMF’s methodology
for forecasting is evidenced by the IMF’s Internal Evaluation
Office, particularly in high profile cases and lending under
exceptional access.

The ECB
bought Greek debt on the secondary market in order to serve the
interests of European private banks. The ECB has used this mechanism
at its discretion for undemocratic purposes interfering in the
political sovereignty of european member states and acting against
their Constitutions between May 2010 and July 2012, when it was
substituted by the Outright Monetary Policy Program. This decision
served the interests of the private financial sector, allowing the
French and German banks to reduce exposure on their holdings of Greek
bonds. The IMF is very clear about that: “A delayed debt
restructuring also provided a window for private creditors to reduce
exposures and shift debt into official hands”. Moreover, the
purchase by the ECB of significant quantities of bonds on the
secondary market increased the price of these financial instruments.
This allowed the bond-holders to reduce their losses the moment they
sold them. We should also note that between May 2010 and September
2012, the ECB decided to freeze the SMP several times, which created
market stress and had an influence on different political decisions,
such as the increase in the EFSF lending capacity to €440 billion.
Such political influence clearly falls beyond the mandate given to
the ECB and it represents a questionable breach of its function.

The ECB
purchased Greek bonds under the SMP cheaper than their nominal value
on the secondary market but asked for full reimbursement (nominal
value and interest payment). One estimation cites that the ECB
spent €40 billion to acquire the estimated face value of €55
billion, which if held to maturity, the ECB would reap the full
difference between the price paid and the repayment plus interest.
The ECB has already received hefty interest from Greece, as the rates
on the Greek bonds it holds are high. Although the ECB holds far less
Greek debt than it does from Italy or Spain, Greece pays much more
in-terest to the ECB. Over the course of 2014, the Greek Government
paid €298 in interest on ECB loans, which represents 40% percent of
the €728 million income that the ECB received from the total
interest paid by the five countries in the SMP program. This is
despite the fact that the Greek debt with the ECB represents only 12%
of the total.

After the
public revelation that the ECB and the Na-tional Central Banks (NCBs)
made profits on the SMP program, the Euro-area governments agreed in
November 2012 to transfer an amount equal to any profit on SMP
holdings of the country’s debt as long as it complies with the
conditions of its surveillance program. The ECB owes Greece almost €2
billion from the profits the ECB has made.

In February
2012 the restructuring of Greek debt involved a reduction of 53.5% of
Greek sovereign securities held by private creditors. However the ECB
refused to participate in the debt restructuring, whether through
canceling part of the debt stock, postponing its maturity or reducing
the interest rates. This was justified under the premise of
“independence from any government”.

The
strictly confidential document detailing the IMF Board meeting of
Greece’s SBA mentions that “Dutch, French and German chairs
conveyed to the Board the commitments of their commercial banks to
support Greece and broadly maintain their exposures”. Instead, the
foreign banks disrespected their commitment, and as detailed in
Chapter 4 of this report, the bailout mechanisms facilitated the
transfer of debt ownership from private banks to the official sector.
The European Parliament reaffirms that the bailouts shielded the
“banking sector from losses by transferring large amounts of
programme country sovereign debt from the balance-sheet of the
private sector to that of the public sector”.

The
Troika’s bailout loans, far from being utilized to help pay for
wages and pensions are instead used to reward the holdouts, many of
which are known vulture funds, by repaying them in full. From May 15,
2012 until the end 2015, €3.615 billion has been repaid at an
average of 4.3% interest.

4 comments:

I know I am a stuck record in an endless repeating loop. Still, I stress the need for a new story. Close the old book. Choose autonomous democracy, the focused intelligence of Greek voters cannot be matched by any corporatist hierarch or its possessed national states.

Okay, I'll suggest specifics. Are we ready to stand on our own with no new financing? Yes or Oxi.

Thank you very much for your comments and participation in the blog. Good points. The purpose now is exactly to proceed in suggestions. I'm very interested in your further thoughts. And of course, more participants are welcomed in this blog to boost a dynamic discussion about alternatives to today's dead end.

and if you're interested....take a look at Scotland under the SNP....apparently their debt is 2nd only to Greece to date.....but hidden under the UK accounts....a stealth implementation of what happened in Greece is happening there without direct EU intervention....it looks like Nicola Sturgeon, in her 'desire' to remain in the eu after Brexit has her proving to her Brussels idols that she can implement their agenda better then them.....she's hoping for a career change to a position of power within Brussels by show of her 'talent' for Marxist socialism